Real estate agents launch campaign to end 'price baiting'

By Clare RawlinsonUpdated
Fri 6 Jun 2014, 11:42 AM AEST

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Some agents are concerned that other agents are wasting buyers' time with price estimates so low they are beneath the reserve.

A group of property investment advisers and real estate agents in Victoria and New South Wales have launched a campaign to crackdown on what they say is the deceptive tactic of underquoting or "price baiting".

The group wants a change in regulation, which would force vendors to publish their reserve price prior to a sales campaign.

The former chairman of the Real Estate Institute of Victoria's ethics committee John Keating says some agents give price estimates to potential buyers that are up to 20 per cent below the reserve.

He says this results in house hunters wasting time and money on looking at, and often getting building inspections on, properties they cannot afford.

"They're talking with forked tongues to purchasers and underquoting in order to get more interest in the properties," Mr Keating said.

"It's gypping people, it's disgraceful, and it's wasting all their time on getting legal reports and billing investments."

Mr Keating and other agents have started online petitions in Victoria and NSW calling for the state governments to make it compulsory to publish reserve prices.

"Buyers detest the systemic underquoting that's going on, so if you can make it an absolutely transparent marketplace I think more properties would be sold by auction," he said.

'Duping' rife in real estate

Mr Keating says price baiting was so rife that properties in Melbourne's east and bayside suburbs were being promoted to buyers for as much as $400,000 below their reserve.

"There's a misguided perception that if you get more people (at an auction), you'll get more money for the property," he explained.

"Now sure, it's the job of the sales people to get people to the auction, but you don't have to do it by duping people."

The Real Estate Institute of Victoria says it condemns the practice, and it is already against the law.

Paul Bird from the REIV says buyers who experience such practices should contact Consumer Affairs.

"REIV member agents are always required to be fair and honest in their dealings with members of the public - that includes sellers and buyers - that's a requirement of the act that they be fair and honest at all times," he said.